I hate days like today. In the morning, it looked like the stars were aligned for a very directional move in EUR/USD that would break an important support level at 1.3080. The slide reached 1.3025/30 but prices soon reversed as equities recovered early losses. Banks are once again in the spotlight with BofA lined up for a rescue along the lines of the Citi deal last month while Citi itself was the subject of rumors that it would be totally nationalized. Short-covering in EUR/JPY helped spur short-covering in EUR/USD which reached 1.3185. USD/JPY reached 90.00 and EUR/JPY 118.65 before settling back around 118.25.
A tough close to get excited about, given the choppy rebound. If short, look to cover on a move through 1.3250; Intraday bounces stalled several times in the 1.3230/40 area. Should 1.3000 give way, ride the tiger as 1.2550/60 is the medium-term downside target.
